Energy Stocks on Activist Investors’ Hit Lists: Talisman Energy (TLM)
Unlike EnCana, fellow Canadian producer Talisman Energy’s (TLM) issue isn’t that it’s too focused … its actually too spread apart.
Having assets all over the world is OK if you’re the size of Exxon Mobil (XOM), but when you’re only a midsized producer, it can be a big headache. Specifically, TLM has been struggling for years under the weight of poor production growth, inefficient operations and an overall high cost profile.
Enter Carl Icahn.
The activist investor announced via a tweet that he had taken a huge stake in the small independent E&P firm. Icahn has pushed for board seats and revitalization of the Talisman’s strategy. So far, that has resulted in a series of asset sales, with TLM raising about $2.2 billion last year. Another $2 billion worth of noncore sales is in the works for 2014.
The ultimate goal for Icahn could be to slim down the firm enough that it’s a prime candidate for a buyout. Many of the projects sold were natural gas based.
Based on this strategy, “analysts estimate Icahn can unlock anywhere from $500 million to $8.8 billion US in value” from struggling Talisman.
That certainly would be a welcome sign for struggling TLM stock.